U.K. retail sales rise faster than expected

JasonDouglas

LONDON--U.K. retail sales rose by more than expected in August as consumers splashed out in department stores and on home improvements, but sales look set to be weaker in the third quarter than they were earlier in the year.

The Office for National Statistics said Wednesday that retail sales rose 1.0% on the month in August, a faster rate of growth than the 0.6% recorded the previous month and much faster than the 0.3% expected by economists polled by The Wall Street Journal.

Sales were buoyed by spending in pharmacies and jewelers, and on floor coverings and gasoline, the ONS said. Sales overall were 2.4% higher in August than a year earlier.

August's figures follow two consecutive months of weak sales as households cut back in response to rising prices. Annual inflation hit 2.9% last month, well in excess of the Bank of England's 2% target.

The ONS said Wednesday that sales would need to rise 2.9% on the month in September to prevent sales in the third quarter being lower than they were in the second--a rate of growth not reached in almost four years.

Economists say that with consumers feeling the pinch, business investment and exports will need to play a greater role in driving growth in the months ahead in order to prevent the U.K. economy slowing further.

Write to Jason Douglas at Jason.Douglas@wsj.com and Toby Luckhurst at Toby.Luckhurst@wsj.com

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